NVIDIA stock forecast: Can the stock come out of the slump?
US chipmaker NVIDIA (NVDA) stock price has not yet come out of its slump. A slew of headwinds from rising inflation, soaring rates and slowing demand continued to put a lid on the price recovery.
After reporting disappointing second quarter earnings result that missed analysts expectations in August, Nvidia was hit by a new export licence requirement for future shipping of its chips to China.
The stock plunged to a fresh 52-week low of $132.7 on 1 September after the company announced the new export license in a filing on 31 August.
NVDA stock price has been in the dumps in 2022, falling 53.26% year-to-date, as of 2 September, dragging down its market to $347.31bn, according to Companiesmarketcap. But what does the recent fall to a new low mean for the NVIDIA stock predictions?
NVIDIA stock analysis: Technical view
NVIDIA (NVDA) is a leading designer of graphics processing units that improve the computing experience. Its products are used in a wide variety of application markets, such as gaming, automotive infotainment systems and cryptocurrency mining.
When NVIDIA’s founders – Jensen Huang, Chris Malachowsky and Curtis Priem – started the company in 1993, there were more than two dozen graphics chips companies. Three years later, the number of graphic chips companies soared to 70.
In the past two years, NVIDIA’s stock growth had been stellar, gaining 121.91% and 129.29% in 2020 and 2021, respectively. The global chip manufacturing industry saw rising demand from new technology trends, such as the Internet of Things (IoT) and artificial intelligence (AI).
The rapid growth of advanced gaming services, IoT and AI has raised demand for data centre capacity to handle internet traffic that needs to be powered by advanced semiconductor chips. New vehicle technology, such as autonomous driving, also requires cutting-edge chips.
The rising popularity of cryptocurrencies also drove NVIDIA’s stock growth as the company’s graphics processing chips have been used for crypto mining. Global chip shortages induced by the Covid-19 pandemic had also been bullish for the NVDA stock price.
But the tech stock started to give up its gains entering 2022. At the time of writing on 2 September, NVDA stock price has fallen 59.7% from the all-time high of $346.47 achieved intraday in November 2021. NVIDIA stock has disappointed shareholders with a 38.11% loss in one year.
Although Nvidia’s recent drop is in line with the wider market, the chipmaker is underperforming the tech-savvy Nasdaq Composite Index (US100), which has lost 25.09% year-to-date, according to TradingView.
Risk assets came under pressure amid geopolitical uncertainty following the Russian invasion of Ukraine, and monetary policy tightening by the Fed in an attempt to tame decades-high inflation.
The intensifying sell-off in cryptocurrencies, which saw the price of bitcoin (BTC) plummeting to below $26,000 for the first time in 16 months, may have a further negative effect on the Nvidia stock price due to its exposure to cryptocurrency mining.
In other news, the U.S. government informed Nvidia on 26 August about a new license requirement for upcoming exports to China, including Hong Kong and Russia, in order to minimise the possibility that the company’s chips A100 and H100 might be used in or diverted to “military end use” or “military end user” in China and Russia, Nvidia said in a filing on 31 August.
The company does not export to Russia. However, it highlighted $400m in potential sales to China in the third quarter, which could be affected by the new licence requirement if customers choose not to buy its alternative product offerings, the US government didn’t grant licenses in a timely fashion, or important clients are refused licenses, Nvidia said in the filing.
The US Government granted the permit for export and reexport for the company’s development of H100 integrated circuit on 1 September, but the news did little to lift the stock up. NVDA stock price closed 7.67% lower at $139.37 on 1 September following the announcement.
As of 2 September, the stock was quoted at $137.11, dropping 1.6%, TradingView data show.
Slowing demand for semiconductors
The Russia-Ukraine war and new Covid-19 lockdowns in China have severely harmed demand for consumer electronics and home appliances, according to Zhao Haijun, CEO of Chinese Semiconductor Manufacturing International, quoted by Nikkei Asia on 13 May.
As a result, there has been a “significant adjustment” in chip orders for those sectors.
Zhao estimated that at least 200 million units of smartphones could disappear this year as companies with exposure in Russia and Ukraine saw their revenue gone. In addition, sales in China have also dropped due to the new Covid-19 lockdowns.
Disappointing Q1 results, Weak outlook
NVIDIA posted a revenue of $6.790bn in the second quarter of fiscal year 2023 ending 31 July, a 3% increase from a year ago and 19% decrease from the previous quarter, the company announced on 24 August. It was also lower than its revenue guidance of $8.10bn for the quarter.
It reported adjusted earnings per share of $0.51, “down 51% from a year ago and down 63% from the previous quarter”.
NVIDIA also decided to pay its next quarterly cash dividend of $0.04 per share on 29 September 2022.
The company gave a weaker outlook for the third quarter with revenue expected to be $5.9bn, plus or minus 2%. It expected revenue from gaming and ‘Professional Visualization’ to decline sequentially, as OEMs (original equipment manufacturer) and channel partners reduce inventory to match current levels of demand and get ready for NVIDIA’s new product generation. However, Nvidia said the decline is expected to be partially offset by sequential growth in Data Center and Automotive.
“Going forward, we expect the data center segment to drive most of the firm’s growth, led by the explosive artificial intelligence phenomenon. This involves collecting large swaths of data followed by techniques that develop algorithms to produce conclusions in the same way as humans,” said Abhinav Davuluri, analyst at Morningstar on 1 September.
Zacks’ analysts expected NVIDIA to spotlight strong growth in its flagship graphic cards for gaming, GeForce desktop and notebook GPU, as well as surging demand for its hyperscale accelerators for AI computing.
“Additionally, collaboration with Mercedes-Benz is expected to further strengthen NVIDIA’s presence in the autonomous vehicles and other automotive electronics space. However, management expects COVID-19 pandemic to negatively impact near-term revenues. Moreover, the U.S.–China trade war remains a key concern,” Zacks analysts said.
NVIDIA stock forecast 2022-2025, 2030
What is the analyst outlook on NVIDIA future stock price for 2022 and beyond? The current downtrend did not seem to dampen analyst optimism.
At the time of writing (2 September) the consensus of 34 analyst views compiled by MarketBeat set NVIDIA stock price target at an average of $218.85 for the next twelve months, expecting the price to rise by 58.54% from the share price at the time of writing (2 September). The price targets ranged from a high of $320 to the low of $133.
The consensus sentiment on the stock was a ‘moderate buy’, with 24 out of 34 analysts giving it a ‘buy’ recommendation, nine a ‘hold’ and one a ‘strong buy’.
Meanwhile, in its NVIDIA share price forecast, economic data provider Trading Economics projected that the stock could trade at $157.95 a share by the end of this quarter and at $144.78 in one year.
Although analysts don’t typically provide long-term forecasts beyond 2023, algorithm-based forecasting sites do. Wallet Investor, for example, in its Nvidia stock forecast gave a bullish outlook for NVIDIA’s share price, suggesting the stock is an “awsome long-term” investment.
The site in its NVIDIA stock forecast for 2022 projected that the stock could trade at $191.521 per share by December. According to its NVIDIA stock forecast for 2025, the share could rise to $387.282 in December 2025. Its 5 year forecast saw the share price trade at $483.113 by August 2027.
As of 2 September, Gov Capital’s algorithm-based NVDA stock forecast estimated that the stock could rise to $185.570 by end of December 2022 and $1,004.329 by end of December 2025. The company expected the NVIDIA stock to increase to $1,617.588 by 5 September 2027.
Algorithm-based forecasting sites did not yet provide NVIDIA stock forecast for 2030.
When looking for NVIDIA stock price predictions, always remember that analyst and algorithm-based projections can be wrong. Forecasts and analysts’ expectations shouldn’t be used as a substitute for your own research.
Always conduct your own due diligence and remember that your decision to trade should depend on your risk tolerance, portfolio size and goals, and experience in the market. Keep in mind that past performance does not guarantee future returns. And never invest or trade money you cannot afford to lose.
FAQs
Is NVIDIA a good stock to buy?
Wall Street analysts maintained a ‘buy’ rating for NVIDIA’s stock. However, whether NVIDIA stock is a good stock for you to buy should depend on your own research. It’s worth remembering that analysts’ predictions can be wrong.
How high can NVIDIA stock go?
Wall Street analysts gave varying price targets for the next twelve months, ranging from the high of $320 and the low of $133, and averaging $218.85 at the time of writing (2 September). In terms of long-term forecasts, Gov Capital suggested that NVIDIA’s share price could rise to $1,617.588 by 5 September 2027. Wallet Investor projected it to hit $483.113 by August 2027. However, it is critical to conduct your own research before any investing or trading decision, as predictions may be inaccurate.
Where will NVIDIA stock be in 5 years?
As of 2 September, Wallet Investor suggested that NVIDIA stock could reach $483.113 by August 2027 and Gov Capital forecast it could trade at $1,617.588 by 5 September 2027. However, keep in mind that stock markets are volatile, and the price may fluctuate significantly during this time. Always conduct your own research. And never invest or trade money you cannot afford to lose.
Should I invest in NVIDIA stock?
As of 2 September, NVIDIA stock has lost around 53% of its value this year. Your decision to invest in NVIDIA should depend on your risk tolerance, portfolio size and goals, and experience in the stock market. You should do your own research to form an opinion on whether the stock is suitable for you. Remember that past performance does not guarantee future returns. And never invest or trade money you cannot afford to lose.
Markets in this article
Related topics
